A victim of the $450m trading scam, operated by a group of fraudsters known to the media as the Cayman Gang of Four, recently received a curious letter. Though it was sent by Dundee Merchant Bank, of the Cayman Islands, it contained a downtown Toronto address. Canadian readers know that Dundee Merchant Bank, which also traded as Dundee Bank, went into involuntary liquidation in Grand Cayman, a couple of years ago. So what's the story here ? Dundee Merchant Bank's small office in Grand Cayman has been closed for years. Is the bank open in Canada ?
The letter, received last week, was backdated to December, 2014, and it discussed the victim's investment account. Dundee Merchant Bank is believed to have been ordered liquidated by Canadian regulators, after it was discovered that the bank, which held only a "B" class banking license, no longer had the required international bank as a parent. Dundee Bank of Canada had been sold, and therefore the Cayman bank's license was no longer valid.
Why on earth is a bank, supposedly liquidated years earlier, still in operation, and in Canada, sending correspondence to an American investor ? Though there is no publicly-available information on the subject, it is believed that Dundee Merchant Bank had insufficient funds on hand to return to its depositors, and the officers, President Derek Buntain and Senior Vice President Sharon Lexa Lamb, could not complete the liquidation process. I leave it to the authorities, and regulators, in the Cayman Islands to determine what Caymanian laws, and regulations were violated.
Also, why use a Toronto address ? The original parent entity, Dundee Corporation, is located in Toronto. What is its involvement in what appears to be a breach of trust, by Dundee Merchant Bank officers, affecting its depositors ? We cannot say, but it suggests that the Bank of Canada may want to investigate whether the operation of an unlicensed, reportedly closed, financial institution, in Ontario, is a violation of Canadian law.
On last point, if you call the Canadian telephone number listed for Dundee Merchant Bank, it rings in Grand Cayman, where it is answered by none other than Sharon Lexa Lamb, who answers for Dundee Leeds, an affiliated company that itself no longer exists, having also been sold off, who assures callers that everything is normal, and that the victim's investments at Dundee Merchant Bank, are in good standing, and on deposit in the reputable, old-line financial institutions, Butterfield Bank.
Where are the Canadian and Cayman government regulatory authorities on all this ? Asleep at the switch, or influenced by the good old-boy network, in the financial industry, to ignore fraud when it occurs in their jurisdiction ?